Slow and Steady Wins the Race - Smart Money Seed


Slow and Steady Wins the Race

How often do you find yourself in someone's home or apartment thinking wow this is really nice. How the hell do they afford all this stuff? Nice furniture, a huge Ultra HD TV, fancy decorations, a brand new car outside. They might be telling you a story about a great vacation they just got back from or an amazing meal at an expensive restaurant. Chances are, that person might be living beyond their means.

Before we go any further, let's make something extremely clear. The only way for you to succeed with money is to spend less than you make. This simple concept seems to be so difficult for so many people in our society and our generation. Believe it or not, you might not be able to buy something if you can't AFFORD it.

I apologize if you're too blown away by that concept to continue reading. As for the rest of  you, let's march on.

The term to describe this idea is delayed gratification.We're not saying that you can never have a new car or expensive furniture. We're just saying that you should wait to reward yourself with those types of luxuries at least until you have the money for them if not longer.

Utilize Your Resources

I currently live with one of Christian's and my best friends, Jordan. Jordan and I make enough that we could've bought some new furniture when we moved in together. Instead, if you walk into our living room, you can expect to see:
  • A futon that was in Jordan's parents' house the entire time I've known him
  • A couch that was in my aunt's house since I can remember
  • A chair that was in my grandparents' living room for years
  • A chair Jordan inherited from a family friend
I would bet that most of us could point to a few opportunities to take advantage of a hand-me-down for something that might be pretty expensive if we had to purchase that item brand new. I don't want to downplay my appreciation for my hand-me-downs-- I certainly appreciate the opportunity to have those things.

But for the sake of transparency, let's take a look at some of the items that have saved me a decent chunk of change that I've been fortunate enough to receive more as a gift rather than a hand-me-down. My privilege and the generosity of my family is not lost on me.
  • I drove a car through high school and college that I was incredibly fortunate to have received from my grandma.
  • My parents got me an awesome 60" TV for Christmas during my senior year of college.
  • After my first PS4 that I purchased took a shit on me, my parents got me a new one this past Christmas. Video games are one area where Christian and I spare no expense, so I really appreciated this gift.

Take It Slow 

If you feel like you need the latest and greatest of everything and will spare no expense to achieve that, I've got a tip for you: get over yourself. My free couch pretty much feels just the same on my ass as your $1,000 couch does. My Ford Focus gets me where I need to go just like your huge truck or fancy sports car, and I'd bet I spend a little less on gas along the way.

There's no need to rush into a life of luxury. In fact, if you try to rush into a luxurious lifestyle, you're probably going to create a lot of problems for yourself later on in life. Even if you're not racking up debt to purchase expensive things, you are incurring opportunity cost. An example of opportunity cost is that if you spend $1,000 on a couch, you could have purchased 2 or 3 plane tickets almost anywhere in the country. Or maybe you're struggling to make ends meet or struggling with a bunch of debt and could have used that $1,000 to make your next mortgage payment or pay off a credit card.

I'm not advocating against ever buying anything nice. I'm just saying that you need to consider your needs and value system before making a large purchase on a luxury item. Should you sign up for a $30,000 car loan, or do you have some credit card debt you need to clean up first? Do you need a new couch, or would you rather get one at a consignment shop or as a hand-me-down and allocate that extra money towards a vacation? What exactly can you do to answer those questions?

Think, Analyze, Act

I recently saw another personal finance blogger tweet that his family waits 6 months to a year before making large purchases. I asked him for clarification, and he essentially said he would apply this strategy to everything outside of his normal spending habits.

This may come as a shock to those of you who know how much I love to argue, but I did not respond to his last tweet. This guy left that conversation with a satisfied feeling that he had enlightened me although I thought that was the worst financial advice I had ever heard. We're new to the blogging world, so I didn't want to rock the boat too much quite yet.

Yes, slow and steady wins the race. But being arbitrarily slow in decision making for no reason is just stupid.

The key for making purchases on luxury type items is to follow a logical process that will allow you to make a smart decision given your current financial state. Sure, postponing large purchases and driving everything into the ground will help you to keep your expenses low, but we're not really interested in this idea of passively hiding from making big decisions. What's our process for deciding whether we can really afford something? Think, Analyze, Act.

     1. Think

Our 6th-8th grade reading and English teacher, Miss Wetterau, used to stress to us to always trust our first instinct when answering test questions. This mindset doesn't necessarily apply to all situations, but I think it fits pretty well with financial decisions. Take a second to think about your financial state, what value you would get out of this purchase, and what your alternatives might be. Is this a good idea? Is it exactly what you want to spend this money on? Could something cheaper provide similar value to your life, or would you be happier waiting until you can spend a little more to get exactly what you want? 

What does your gut tell you? If something inside of you is putting up a red flag, that's a pretty good sign that you need to forget about this or revisit later once you make some financial progress. If you're feeling confident that this purchase is a good idea, let's put some facts and numbers behind this decision.

I was recently considering purchasing a new computer. My old computer was a very basic Lenovo that I purchased in 2011 before heading off to Ohio State. It got the job done, but I wanted something better, faster, and more mobile so I could be better equipped to support Smart Money Seed. I had been (and still am) stocking away cash like a mad man for 2 years, and my bank account was well equipped to handle this purchase. Okay, I passed test #1.

     2. Analyze

How much exactly are you spending? Are you taking on debt for this purchase, or will you be using cash or a credit card that you are 99.99% certain (nothing in life is 100% certain-- stay woke) that you can pay off at the end of the month? If you're taking on debt, what type of debt is it? Run your financial numbers to make sure your extra debt payment isn't going to cripple your ability to make ends meet. If you're paying cash, make sure you'll have enough left over to cover your living expenses and minor emergencies.

Consider your alternatives. I am a huge proponent of reading internet reviews before making almost any decision. I probably put a little too much stock in internet reviews which is something Amanda likes to point out when I'm poring over pages of Yelp reviews before deciding where we go for dinner. Maybe there's a cheaper or better alternative that you didn't even know existed. Maybe you're validating your decision as the best possible decision. Don't try to reinvent the wheel. We can learn a lot from the experiences of people who have done the same things before us.

Would this purchase cause something else it might be replacing in your life to become obsolete? Does that item have any value that you could recover if you sell it? Even if it's not a huge part of the equation, every little bit helps. I have sold old video games to Gamestop only 1 time in my life because I was pretty frustrated with their low-ball offer. Instead of getting $2 for a game they're going to sell for $30, I now have sports video games from the early 2000s collecting dust in a box. Sometimes selling your old item can have a much greater impact on your decision such as when you're purchasing a new car. 

Back to the computer. I double checked my bank account and validated my feeling that I could make this purchase without any risk given my financial state. I wouldn't have to take on any type of debt or payment plan (and would adamantly advise against that for this type of purchase). My dad came to Findlay and took me to Best Buy. He walked me through my different options and price points, and the store associates were very helpful in laying everything out. I tested out several different computers and read internet reviews of the computers I liked. I was focusing on the positive and negative reviews specifically referencing reliability, speed, and mobility.

     3. Act

You should now be well-equipped with plenty of information about yourself and the market for the product you're looking to buy. Now it's time to pull the trigger. It's okay to sleep on the decision for a few nights, but if you've done your due diligence to this point, you know what decision you should make. Waiting a year is not going to drastically change the equation unless you're expecting some dramatic change in your financial life during that time. Make a decision.

I love my new laptop which makes weekend coffee shop
blogging so much fun! (Nerd alert, I know)

Ultimately, I decided to purchase a Microsoft Surface Book. It's one of the best products on the market today, and I expect it to last me a really long time. It's a tablet and a laptop in one, so it saved me from having to purchase a keyboard for my tablet (which isn't that great to begin with). I moseyed around in the Think stage for quite a while, but once I made a commitment, I thought about the purchase, analyzed my options and decision, and acted all in a few hours. I'm very happy to not have some stupid arbitrary rule in my life that would have caused me to wait until next year to buy this computer.

Make Smart Decisions

As millennials, most of us are currently living the least expensive years of our lives. We should also have pretty low standards since most of us haven't been exposed to much of a life of luxury. Just because you're starting to make money after high school or college doesn't mean you have to spend it. Figure out what you value the most, spend money on those things, and save on the rest for now. You can slowly add luxury items as you go-- you don't need them all right this second.

When it comes to personal finance, a little patience can go a long way. When you think you're ready to make a large purchase, Think, Analyze, and Act to ensure you're making the best decision you can make. What possible usage for your money could get you the most bang for your buck?


  1. I need the patience reminder more often than I'd like to admit. I'm good about large purchases, then I run the numbers and make a plan, but it's those smaller, spontaneous purchases (clothes, eating out) that always seem to get me. It helps that I know that about myself and can remove triggers. Not go to the mall unless I need something very specific and always have a meal plan.

    1. I completely agree with what you're saying. Everyone needs to know what works for them. If you know your process requires extra time to make sound financial decisions, take that time. My point was have a defined process don't just arbitrarily wait a period of time just to wait.

  2. Hey guys. I largely agree with you. However, I believe that for many of us our purchasing decisions, large or small, are based on emotion not logic. We "want" something to satisfy some need; be it functional, emotional, strategic, etc. It's that lack of self-regulation in the moment that gets us in trouble. I agree that intuition is superb to listen to but without the proper control it's easily ignored. Hence, the existence of buyer's remorse. If a person can redirect their emotional need or satisfy it another way, they may be able to initiate your very smart and logical process. For example, I wanted to stock my bar with booze from the Mexican duty-free shop. I wanted Malibu rum to feel more "on vacation" in my everyday life. I wanted to treat myself on occasion with something that screamed relaxation and indulgence. The booze was sold at a huge discount, included no tax, and it made financial sense. I had the money. But I didn't buy a thing. Why not? Because I switched my desire for a feeling of pseudo-vacation to a feeling of excitement at the prospect for another real vacation in the near future. That ability to redirect didn't exist for me a year ago. It's a process. For those new to it, a literal time-out isn't a bad thing. I like your logic though, guys. My smart cougar cubs.

    1. Thanks for the input! Intuition is intended to just be one step in the process. It sounds like you passed Think in your process but Analyze caused you to turn it down. That's great! The message we're trying to send is don't delay gratification just to delay it. Have a sound, repeatable process by which you make decisions.